Q1) Sales budget of Mulls Company for fourth quarter of 2009 is given below:
|
Sales
|
October
|
November
|
December
|
|
|
$96,000
|
$72,000
|
$108,000
|
Sales are 20% cash (20% of 108,000 is 21,600) and 80% credit (accounts receivable).
Collections on credit sales are given below:
50% in month of sale
30% in month following sales
15% in second month following sale
5 % uncollectible
Payments for inventory are 70% in month following purchase and 30% two months following purchase.
Calculate cash collections for December.